Passive income or sometimes called residual income is smart money because it gives you the freedom to do other things whilst the money stream keeps coming to you. As people often say, you continue to make money whilst you sleep.

Different types of passive income have different characteristics.  The typical ones we come across most often are as follows:

Interest from Bank –– it is a good passive source of income.  It is also a convenient spot to park your extra cash whilst you decide what investment vehicles to look for.

Dividend income — holding stock (shares) for yield is one of the strategies of good financial planning.  In good times in particular, this is an excellent leverage because you can tap into the high-yield blue chips and ride on their extra success easily.

Rental income from properties / other assets — this covers most kind of rentals, from leasing of residential or office premises , to leasing of equipment or machinery, etc. By allowing a small portion for expenditure, you can hire a management office or an agent to take care of everything for you. Potential capital gains on properties is often a sweet added bonus.

Royalties and Patents — income derived in this class are usually relating to “intellectual properties”.  Common examples involve professionals like singers, authors, and inventors, etc.  If you have special talents, go for it.

Read more on Every Bit Of Passive Income Frees Your Time…